Long-awaited tax reforms unveiled

Long-awaited tax reforms unveiled

FREDERICTON – New Brunswickers will pay less personal income tax this year, thanks to long-awaited tax reforms unveiled Tuesday by the Liberal government.

The Grits’ four-year tax plan, presented in the legislature along with a new budget, pledges $143.5 million in personal and business tax savings in 2009-10, with $118 million of that coming in personal income tax reductions.

By 2012-13, those savings will reach $380.2 million, most of which will be on the personal income tax side.

Overall, the Liberals are moving from a four-rate, four-bracket tax scheme to a two-rate, two-bracket system. By 2012 the two rates will be set at nine per cent and 12 per cent respectively.

The changes are effective July 1 and are retroactive to the beginning of year.

Premier Shawn Graham said the reductions will completely offset his $115-million across-the-board tax hike from two years ago.

“This is going to put more money back into the pockets of New Brunswickers, which will help them deal with these challenging times,” he told reporters.

For example, a single New Brunswicker with an income of $25,000 would see their provincial income tax bill drop from $1,509 in 2008 to $1,307 this year. That’s a savings of $202, or 13.4 per cent.

A single-earner family with an income of $40,000 would see their tax bill decrease from $2,501 in 2008 to $2,205 in 2009. That’s a dip of $296, or 11.8 per cent.

And a family with one wage-earner and an income of $60,000 would save $412 in taxes between the two years ($5,570 down to $5,158), a drop of 7.4 per cent.

“We need to give people and businesses a reason to be here in New Brunswick,” said Finance Minister Victor Boudreau, who announced the changes in the legislature. “By having a very attractive tax system, our province will draw people and businesses from around the world.”

“There’s no doubt the government could have been a bit bolder and gone a bit further, but this tax plan goes beyond what any other government in the region is doing, or has done,” he said, noting the changes will boost investment and job creation.

“This plan for lower taxes will do more for New Brunswick than any of the economic plans currently being talked about by the other provincial governments.”

As well, the Liberal tax plan enriches the province’s Tuition Rebate program, which is paid out to recent university graduates who work in the province.

The changes double the maximum lifetime rebate from $10,000 to $20,000, and the maximum annual rebate from $2,000 to $4,000.

The idea is to make New Brunswick more attractive to recent graduates with high student debt loads.

“It’s a real victory for students seeking employment in the province,” said Jon O’Kane, a vice-president with the University of New Brunswick’s student union.

The Liberal tax document also increases the Low-Income Seniors’ Benefit from $200 to $300 in 2009. The Benefit will be further increased to $400 in 2010. According to government, increasing the benefit to $300 will provide savings of $3.5 million to local seniors this year.